In recent testimony to the U.S. Senate Budget Committee, a Brookings Institution economist described some potential reforms that he said could reduce healthcare administrative costs with few substantive downsides, including eliminating Medicare’s Merit-Based Incentive Payment System (MIPS), which he argued places large reporting burdens on clinicians with few benefits.
In written testimony dated Oct. 18, Matthew Fiedler, Ph.D., the Joseph A. Pechman Senior Fellow in Economic Studies at the Brookings Schaeffer Initiative on Health Policy, began by describing how MIPS adjusts most clinicians’ Medicare payments upward or downward based on their performance in several domains, including cost and quality.
“Unfortunately, there is little reason to believe that MIPS is achieving its goal of improving the quality or efficiency of patient care,” Fiedler said. “One fundamental problem is that MIPS allows clinicians to choose many of the measures that they are evaluated on. In practice, different clinicians choose different measures, and they likely do so at least in part based on which measures they expect to perform best on. This makes it impossible to use MIPS scores to meaningfully compare clinicians and, thus, doubtful that MIPS can motivate better outcomes.”
He also noted that measuring cost and quality performance at the level of individual clinicians or practices, as MIPS aims to do, is also challenging. Patients’ outcomes are shaped by the efforts of many different providers, which makes it difficult to determine who is responsible for what, plus it can be hard to construct statistically reliable performance estimates at the provider level. “This is a recipe for weak, incoherent incentives, and it is likely why a plethora of programs that have adjusted providers’ payment rates based on provider-level measures of cost and quality performance (including programs that avoid some of MIPS’ distinctive shortcomings) have failed to improve care.”
He goes on to describe how MIPS imposes large compliance burdens on practices. “Much of the information used to compute a practice’s MIPS score—notably its performance on quality measures—is reported by the practice itself. Practices are also responsible for deciding which quality measures to report, as well as how they want to be scored in other MIPS domains. These activities are costly.”
Fiedler cited a study that interviewed practices about their MIPS compliance costs and estimated that practices spent nearly $13,000 per physician to comply with MIPS in 2019, on average. If this estimate is representative of all MIPS participants, he noted, then total compliance costs in 2019 amounted to $12 billion or 13 percent of total provider revenue under the physician fee schedule. Even if this estimate overstates compliance costs by an order of magnitude, they would still be sizeable.
Fiedler said he sees little reason to believe that MIPS generates benefits that justify its substantial costs. “With colleagues, I have argued for repealing MIPS and replacing it with small, targeted incentives for practices to undertake specific high-value activities: (1) using a certified electronic health record, which can help advance broader federal efforts to ensure that clinical data can flow across providers when needed; and (2) reporting data to a clinical registry, which can help facilitate valuable clinical research.”
In parallel, he suggests that policymakers should strengthen incentives to participate in advanced alternative payment models and, ideally, streamline quality reporting requirements under those models. Fiedler closes by noting that the Medicare Payment Advisory Commission (MedPAC) has similarly argued for eliminating MIPS and replacing it with a voluntary program under which providers’ performance could be assessed using information already reported on physician claims.
